<For translation purposes only>
May 13, 2008
For Immediate Release
REIT Issuer
Hankyu REIT, Inc. (Securities Code: 8977)
19-19 Chaya-machi, Kita-ku, Osaka
Mineo Yamakawa, Executive Director
Asset Management Company
Hankyu REIT Asset Management, Inc.
Mineo Yamakawa, President & Representative Director
Contact:
Hideo Natsuaki
General Manager, Investor Relations Dept.
Email: ir@hankyu-rt.jp

Notice Concerning the Acquisition of Asset

Hankyu REIT, Inc. (hereafter “Hankyu REIT”) hereby notifies today that the acquisition of the asset mentioned below has
been decided.

Details1.

Overview of Acquisition(i)

Acquired asset:

Real estate trust beneficiary interests

Trustee:

The Sumitomo Trust and Banking Co., Ltd.

(ii)

Property name:Hankyu Corporation Head Office Building(iii)

Proposed acquisition price: 11,200 million yen(excluding acquisition-related expenses, property tax, city planning tax andconsumption tax, among others)

2.

(iv)

Proposed acquisition date: May 16, 2008(v)

Seller:Umeda Property Two Co., Ltd.

(vi)

Acquisition funds:

Corporate funds and borrowed funds

Reason for Acquisition
Based on policies and properties under management as stipulated in our articles of incorporation, in order toobtain steady growth with a focus on an overall balanced portfolio, we are acquiring an office-use facility
located inside the Kansai region. Umeda Property Two Co., Ltd., the seller, is a special purpose company that
Hankyu Corporation has invested a 100% share in anonymous associations and this acquisition is the result of
collaboration with Hankyu Hanshin Holdings Group.
Also, with the decision to acquire this property, we have made the following assessments:(i)

Location Conditions
The property is the main base of Hankyu Hanshin Holdings Group. It is located in the Umeda area, thelargest retail business concentration in western Japan. It is within 3 minutes walking distance from
Hankyu Umeda Station and, being situated within 10 minutes walking distance from Umeda Station of
Subway Midosuji Line and JR Osaka Station, it is in a highly convenient location for transport.

1

Umeda area is strongly positioned as an established market area. In recent years the area has been
supplied with a number of newly constructed large-sized buildings that have increased the amount ofoffice buildings and raised its visibility as a recognized business area. At present, a large-scale
redevelopment project is underway—involving the reconstruction of Umeda Hankyu Building anddevelopment of the Northern Yard—and the area is definitely going to continue to expand in the future.
Next to the property is a concentration of retail-use and other facilities popular with young adults such as
the head office of a broadcasting station and a theater, and NU chayamachi (a property held by Hankyu
REIT). The environment is trendy and fashionable. In particular the average age of people working in thearea is low and it is a site where young-minded companies that focus on people’s sensibilities arelocated.

(ii)

Property Characteristics
The property is an office building constructed in 1992. It is a large building with 17 above-ground floors
and a total floor area of 8,279 tsubo. The air conditioning system comprises two systems located at thenorth and south each combining a central unit and a perimeter induction unit. The standard floor ceilingheight is 2,600mm (all floors have a 100mm access floor not included in this height). It is a large-scalebuilding with a high standard of facility support such as a power outlet capacity of 50 VA/m2, and a floorload capacity of 300kg/m2. The pale and soft color of the building’s exterior complements the shrubberyof the public spaces, giving a bright and liberating space.
The principal tenant is Hankyu Corporation and, being home to the Hankyu Corporation Head Office,Hankyu Hanshin Holdings, Inc. and others, the property is of central importance to Hankyu Hanshin
Holdings Group.

2

3.

Details of the Acquired Asset
Property nameHankyu Corporation Head Office Building

Specific asset type

Trust beneficiary interest

Proposed acquisition price

11,200 million yen

Appraised value

11,200 million yen (As of April 8, 2008)(Appraisal organization：Daiwa Real Estate Appraisal Co., Ltd.)

Location Address

1-16-1 Shibata Kita-ku, Osaka

Land

80％

Building coverage

Building

Month/Year

September 1992

Built
Floor area ratio

600％ / 400％

Structure/
FloorsSteel-frame, steel-frame
reinforced concrete,
reinforced concrete
structure with deck roof and
2 underground levels, 19
floors.

Zone use

Commercial zone

Use

Offices

Lot area

3,396.82 m

Total floorarea

27,369.37 m2 (Note)

Form of ownership

Right of ownership

Form ofownership

Right of ownership

Design company

Takenaka Corporation

Construction company

Takenaka Corporation

Building recognition
organization

Osaka Municipal Government

Author of engineering report

Daiwa Real Estate Appraisal Co., Ltd. (April 2008)

Property manager

Hankyu Hanshin Building Management Co., Ltd.

PML ofanalysisearthquake

Collateral
Note :

4.

2

risk

3.4% (Evaluator: Engineering & Risk Services Corporation, OYO RMS
Corporation）
None

Based on the regulations of the Building Standard Law: 2 underground levels, 17 floors and 2 rooftop floors.

Overview of Leasing
Total number of tenants

1 (Note 1)

Principal tenant

Hankyu Corporation

Annual rent

674 million yen (Note 2)

Rental area capacity

27,369.37 m2 (Note 3)

Actual rented area

27,369.37 m2 (Note 3)

Occupancy rate

100% (Note 4)

Security Deposit

1,304 million yen (Note 5)

Note 1: The total number of tenants is considered as one because the property is planned to be entirely leased totenants under the master lease method.
Note 2: The figure represents monthly rental amounts as expressed on a fixed-term building lease modificationagreement proposed to be concluded on May 16, 2008, multiplied by 12 times. Figures are rounded to thenearest million yen unit.
Note 3: Rental area capacity and actual rented area are the figures expressed by the fixed-term building lease3

modification agreement proposed to be concluded on May 16, 2008.
Note 4: The ratio of actual rented area to rental area capacity.
Note 5: The figure isthemonetary value of the security deposit expressed by the fixed-term building leasemodification agreement proposed to be concluded on May 16, 2008.

5.

Overview of the Seller
Trade nameUmeda Property Two Co., Ltd.

Location of headquarters

Tokyo Kyodo Accounting Office, 3-2-3 Marunouchi, Chioda-ku, Tokyo

Representative

Ryutaro Uchiyama, Representative Director

Capital

3 million yen (Note)
The seller is a special purpose company in which Umeda Property Holding Two, Ltd.

Major shareholders

has made investments and Hankyu Corporation has invested in anonymous
associations.
1. Acquisition, ownership, disposal and management of trust beneficiary interest

Main business activities

2. Ownership, lease, management and sale of real estate
3. Operations of ancillary relationship to the above operations.

Relation to Hankyu REIT
or asset managementcompany

Hankyu Corporation, shareholder (100% holding) of asset management company,
Hankyu REIT Asset Management, Inc., is an interested party as defined by theInvestment Trust and Investment Corporation Law through its investment inanonymous associations.

Note: Current capital.

6.

Transactions with Interested Parties, etc.
Seller of this property, Umeda Property Two Co., Ltd. does not fall under the definition of “interested party, etc,”
in the Investment Trust Law, but does qualify as an interested party as defined by the conflict of interest
transactions rules of the asset management company and therefore the conclusion of this beneficial interests
purchase agreement has been scrutinized and approved by the investment management committee, thecompliance committee, and the board of directors of the asset management company in accordance with theasset management company’s conflict of interest transactions rules, investment management committee
regulations, and compliance committee regulations.
Moreover, Hankyu Corporation, the tenant of the property, falls under the definition of “interested party, etc,” inthe Investment Trust Law, the conclusion of the fixed-term building lease modification agreement has been
scrutinized and approved by the investment management committee, the compliance committee, and theboard of directors of the asset management company in accordance with the asset management company’s
conflict of interest transactions rules, investment management committee regulations, and compliancecommittee regulations.
The property management operations have been consigned to Hankyu Hanshin Building Management Co., Ltd.
Because the aforesaid company falls under the definition of “interested party, etc,” in the Investment Trust Law,
the conclusion of the property management agreement, have been scrutinized and approved by the investment
management committee, the compliance committee, and the board of directors of the asset managementcompany in accordance with the asset management company’s conflict of interest rules, investment
management committee regulations, and compliance committee regulations.

4

7.

Status of the Property Acquirer, etc.
Property nameHankyu Corporation Head Office Building

Status of thePrevious owner・

property

Trust beneficiary

acquirer, etc.

rightsholders

Company
nameUmeda Property TwoCo., Ltd.

Previous, previous

Previous, previous,

owner

previous owner

Hankyu Corporation(currently Hankyu
Hanshin Holdings,
Inc.)

Parties other
Parent company ofthan special See above “5.
asset management
interested
Overview of the Seller”
company
partiesAcquisition
Purpose of investment
background,Purpose of self use
reasons, etc. management

8.

Acquisition
price

Omitted because
ownership exceeds
one year.

Acquisition
date

March 20, 2003

previous, previous
owner

1. Hankyu Corporation(currently Hankyu
Hanshin Holdings, Inc.) Not applicable.
2. Hankyu Sigma
Corporation
1. Parent company ofasset managementcompany
2. Consolidated subsidiary―of asset managementcompany’s parent
company (currently
liquidated)
1. Purpose of self use
2. Purpose of investment
management

―

―

―

―

February 28, 2003

Previous, previous,

September 28, 1992―

Overview of Intermediaries
Not applicable.

9.

Acquisition Process
May 13, 2008

Resolution approving execution of the agreement at the asset managementcompany's Board of Directors' Meeting.

May 16, 2008

Proposed conclusion of agreement to transfer real estate trust beneficiaryinterests and proposed acquisition

10.

Future Outlook
The acquisition of this property will have minimal influence on the conditions surrounding the management ofHankyu REIT’s assets during the six-month period ending May 31 2008, therefore we do not forecast making
any revisions for said period.
•

The Japanese original document was distributed to press clubs within the Tokyo Stock Exchange (Kabuto Club), Osaka
Securities Exchange, Ministry of Land, Infrastructure and Transport, and to the press club of the construction trade newspaperof the Ministry of Land, Infrastructure and Transport.

•

Hankyu REIT website: http://www.hankyu-reit.jp/<Attached materials>
・Reference material 1

Overview of Appraisal Report

・Reference material 2

Table of Real Estate Portfolio After the Acquisition of the Property

・Reference material 3

External photograph, information guide5Reference Material 1
Overview of Appraisal Report
PROPERTY NAME

Hankyu Corporation Head Office Building

Appraised Value

11,200,000,000 yen

Appraisal Organization

Daiwa Real EstateAppraisal Co., Ltd.

Date of Appraisal

April 8, 2008
Item

Value

Earned Price *Basis for Valuation

11,200,000,000 yen

Earned Price from Direct Capitalization Method

11,200,000,000 yen(i) Operating Return (a + b - c)674,460,000 yen

a Income from rental fees

674,460,000 yen

b Other income

0 yen

c Loss from non-occupancy

0 yen(ii) Operating Costs (a + b + c + d + e + f)a Maintenance/administrative fees, etc.

Assessment based on rent fees according to the
fixed-term building lease modification agreement
Not calculated because long-term lease ensurescontinuous occupancy

142,461,956 yen
3,600,000 yen

Assessment of PM fee based on the proposed PM
agreement with review of the PM fee standard

b Utilities

0 yen

c Repairs

23,772,167 yen

Assessment based on annual repair schedule provided
by engineering reportd Public charges and taxes

109,910,239 yen

Assessment based on actual records

5,179,550 yen

Assessment based on quoted amounts

e Casualty insurance premiumsf Other expenses

Not included as tenant will bear liability

0 yen(iii) Net operating income (NOI = (i) - (ii))

531,998,044 yen(iv) Gain on investment of lump-sum
money

26,080,000 yen

Assessment based on operating yield of 2.0%(v) Capital expenditures

65,206,250 yen

Assessment based on annual upgrade costs provided
by engineering report(vi) Net cash flow (NCF = (iii) + (iv) - (v))

492,871,794 yen(vii) Capitalization rate

4.4％

Price based on discounted-cash-flow method

Assessment based on general consideration oflocation conditions, type of building and contract
conditions of the targeted real estate

11,200,000,000 yen

Discount rate

4.1％

Assessment determined by assessing factors such as
capitalization rate on investments in long-term financial
products, risk of targeted real estate for investment
purposes, and borrowing rates

Terminal capitalization rate

4.6％

Assessment based on general consideration oflocation conditions, type of building and contract
conditions of the targeted real estate

Estimated Price*

12,500,000,000 yen

Land ratio

63.8％

Building ratio

36.2％

Special items to consider at the time of making
adjustments to provisional calculations anddeciding the appraisal price/value

After assessing the earned price from the property at 11,200,000,000 yen using both thedirect capitalization method and DCF method, the computed value is used as areference, and the value of the building and its lot is appraised at 11,200,000,000 yen.

The appraised value of real estate is an indication of the opinion of the value by the appraiser of the real estate in question and isconducted by an appraisal in accordance with the law and standards related to real estate appraisals at the time of the appraisal. Theremay be cases where an appraisal of the exact real estate is conducted again, and because of factors such as timing of the appraisal andthe appraisal method used by the appraiser, a different value may result. Furthermore, the appraised valuation of real estate is neither aguarantee nor an obligation, now or into the future, of a sale or purchase of the real estate.

6Reference Material 2
Table of Real Estate Portfolio After the Acquisition of the Property
Building
No.

Property Name

(Note)

Facility(Type of Use)

Area

Acquisition (TBD)
Date

Acquisition
Price(Actual/Proposed)(in millions)

Investment
Rate

R1 (K)HEP Five

RetailKansaiFebruary 1, 2005

23,10020.7%

R2 (K)

Kitano Hankyu Building

RetailKansaiFebruary 1, 2005

7,740

6.9%

R3 (K)Dew Hankyu Yamada

RetailKansaiFebruary 1, 2005

6,930

6.2%

R4 (K)

Takatsuki-Josai Shopping Center

RetailKansaiNovember 15, 2005

8,600

7.7%

R5 (K)

Nitori Ibaraki-Kita Store (site)

RetailKansaiMarch 29, 2006

1,318

1.2%

Other

October 2, 2006

2,170

areas

April 9, 2007

KansaiMarch 15, 2007

R6
R7 (K)

Kohnan Hiroshima
Nakano-Higashi Store (site)
NU chayamachi

RetailRetail19,30017.3%

69,163

61.9%

February 29, 2008

19,02517.0%

May 16,2008

11,20010.0%30,225

27.0%

November 1, 2005

2,980

2.7%

October 2, 2007

9,405

8.4%

Subtotal

12,385

11.1%

Total

111,773

100.0%

Subtotal
01
02 (K)

Shiodome Eastside Building
Hankyu Corporation Head Office
Building

Other

Officeareas

OfficeKansaiSubtotal
M1 (K)
M2

1.9%

5

Ueroku F Building

Multi-purpose

Sphere Tower Tennoz

Multi-purpose

KansaiOther
areas

Note: Numbers represent the classification for properties owned by Hankyu REIT by each region and type of use.
Letters represent retail (“R”), office (“O”) and multi-purpose (“M”).
Numbers represent the chronological order of the acquisition of each facility. Also, the letter “K” in parentheses to the right ofthese numbers indicates that the property is located in the Kansai region.

7

Reference Material 3

Photograph of External Facade

Map of Location and Surrounding Area

8